Project 2 0.06878278822396722 1510702552403 Project 2: Review of Merchandising Cycle The following information applies to the questions displayed below Waly's Widget Company (WWC) Incorporated near the end of 2011. Operations began In January of 2012 WWC prepares adjusting entries and financial statements at the end of each month. Balances in the accounts at the end of January are as follows: Cash Accounts Recelvable Allowance for Doubtful Accounts memory unts) 21320 Unearned Revenue (45 unlts) 12,350 Accounts Payable (Jan Rent) (L800) S 4,250 Contributed Capital $ 5.250 $ 3,100 $15,000 6,800 Retained Earnings-Feb 1, 2012 5,970 Notes Payable WWC establishes a pollcy that it will sell Inventory at $175 per unit. in January, wwC receved a S5,250 advance for 45 units, as renec ted in unearned Revenue WWC's February 1 inventory balance consisted of 50 units at a total cost of $4,250 wwC's note payable accrues interest at a 12% annual rate. WWC will use the FIFO Inventory method and record COGS on a perpetual basis February Transactions 02/01 Included in WWC's February 1 Accounts Recelvable balance is a $1600 account due from Kit Kat, a WWC customer Kit Kat is having cash flow problems and cannot pay its balance at this time. wwc arranges with Kit Kat to convert the $1,600 balance to a note, and Kit Kat signs a 6-month note, at 12% annual interest. The principal and all interest will be due and payable to w on August 2012. 0202 wwc paid S950 insurance premlum covering the month of February The smount pald s recorded 02/05 An additional 160 units of Inventory are purchased on account by wwc 02/05 WWC paid Federal Express $320 to have 02n0 Sales of 130 unts of inventory occurred during the period of 02/07 02/15 The 45 units that were paid for in advance and recorded in January are delivered to the customer directly as an expense. n30 occurred on 02/06 2/10, net 30 for $12,000-terms 2/15, the 160 units of inventory delivered overnight. Delivery -0210. The sales terms are 02/15 15 units of the inventory that had been soid on 210 are retuned to WWC. The units are not damaged and can be resoid. Therefore, they are returned to iInventory Assume the units returned are from the 2/05 prchase 02n6 wwC pays the frst 2 weeks wages to the employees. The total paild is $2.600 02/17 Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs 02/18 Wrote off a customer's account in the amount of $1,900 0219 $6,200 of rent for January and February was paid. Because all of the rent will soon expire, the February portion of the payment is charged directy to expense. customers on $7,000 of account balances; therefore WWC received less than $9,800 esc